It depends. First contact the plan administrator to confirm if the correct code was used.
The codes as noted below both show there is no penalty would apply which would indicate if your state follows federal protocols then a Roth IRA distribution should not be taxed.
- Q – Qualified distribution from a Roth IRA
- T – Roth IRA distribution, exception applies (simply means an exception applies for tax or penalize if the 5 year rule has been met).
- Per IRS Instructions (page 20): Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:
- • The participant has reached age 591/2,
- • The participant died, or
- • The participant is disabled
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